Begin your investment journey with this detailed explainer on Stock Market Fundamentals!

A stock can be categorized based on its market capitalization, risk profile, demand cycle and dividend pattern.

Stocks are classified into various categories based on their income generation capacity, risk factors, market cap, and resilience of demand.

Growth Stocks belong to companies with high growth potential that do not pay regular dividends, and Income Stocks belong to mature companies that pay regular dividends

Market Capitalization represents the value of a company. Small and Mid Cap companies are riskier than Large Cap companies

Beta measures the volatility of stocks. More volatile companies are called Beta stocks whereas stable companies with large market capitalization are called Blue Chip companies

Based on whether the company sells discretionary products or essentials, its stock is classified as cyclical or defensive.

A stock market consists of multiple exchanges like NSE and BSE where buyers and sellers of financial assets meet

An Index is a benchmarking tool used to measure the performance of a subset of stocks listed on the Exchange. There are different types of Indices.

A Benchmark index is a small subset of stocks that represent a broader universe of stocks. Benchmark indices help in evaluating portfolio performance

A sector identifies a company based on its primary business activity. Sector, style and strategy-based indices are the different types of indices.

Indices like Nifty 50 and Sensex help in benchmarking portfolio performance and sorting the vast number of stocks into smaller pools

Market capitalization-weighted index factors both the number & price of the shares. Price and Equal Weighted Index focus on price and the amount of money invested, respectively.

Investment Analysis involves assessing an investment based on fundamental, technical and macro economic factors to predict its profitability.

Investment Analysis is the process of evaluating an investment's scope for future profitability using different methods of analysis.

Investment Analysis is the process of evaluating an investment to predict its profitability. Top-down approach and bottom-up approach are the methods of analysis.

Fundamental analysis is the process of analyzing a stock's intrinsic value based on financial statements like Balance Sheet, P&L Statement, and Statement of Cash Flow.

Technical analysis is the process of of analyzing investments based on historical price trends, chart patterns and technical indicators.

Quantitative Analysis is an evaluation method that accounts for fundamental, technical and macro-economic factors simultaneously using complex mathematical models and statistical tools.

A Financial Market is where stocks, bonds, foreign currency, and derivatives are bought and sold.

Like other marketplaces, a financial market is where assets, such as stocks, bonds, foreign currency, and derivatives, are exchanged.

Financial Market is where stocks bonds, foreign currency and derivatives are exchanged

Stock Market is where shares of publicly listed companies are bought and sold

Companies and Governments raise money by issuing bonds that are sold in the Bond Markets

Physical commodities like oil, gold, wheat and coffee are bought and sold in the Commodity Market

Futures and Options are derivative contracts that derive their value from an underlying asset

Stock Markets must have several buyers and sellers and many stocks listed on it to be called well-functioning markets

A well-functioning stock market has two key features - a vast universe of stocks and a huge pool of participants giving it liquidity.

Companies raise money in the primary markets through an Initial Public Offering of shares

Stock prices in the secondary market are determined by the forces of supply and demand from sellers and buyers

Stock exchanges match buy orders with sell orders using computerized systems and matching algorithms

Stock exchanges like NSE and BSE perform functions like matching orders, regulating stakeholder behaviour and providing information to investors

A stock market consists of several participants like investors, traders, broker, regulator, depositories and clearing corporations.

Buyers and sellers provide liquidity. However, other stakeholders like Regulators, Depositories, and Brokers are required to run the show.

Regulators like SEBI protect investors, regulate businesses and create laws to ensure smooth functioning of financial markets

Depositories and Depository Participants maintain DEMAT accounts and Clearing Corporations oversee transaction settlements

Stockbrokers and Sub-Brokers buy and sell shares on behalf of investors after charging a commission

Investors believe in the long-term value of a share and Investors seek profits by buying at a lower price and selling at a higher price